Introductory notes from the Compensation Committee

The 2018/19 financial year was satisfactory. The achieved business figures are all above the comparable results of the previous year. Profitability increased further, which is reflected in an increase in all key earnings figures and operating sales margins. At CHF 448.0 million, EBITDA exceeded the previous year's figure by CHF 17 million (+3.9%) and led to an EBITDA margin of 15.9% (previous year 15.2%). All segments contributed to this improvement by achieving both a higher EBITDA and a higher EBITDA margin. Net profit improved by 5.8% to CHF 252.5 million, so that an increase in the dividend to CHF 16.00 per share (previous year CHF 15.00 per share) will be proposed for the third consecutive financial year based on an unchanged dividend policy. Only the organic sales growth of 1.3% was lower than expected, in particular due to lower growth momentum in the second half of the financial year. Overall, sales amounted to CHF 2,818.3 million. Consequently, the average short-term incentive payout compared to base salaries is above that of the previous year.

The Compensation Report explains how these results impacted the variable incentive payments made to the EC members under the different compensation plans.

The purpose of the compensation programs of dormakaba is to attract, engage, and retain executives and employees, to drive performance and to encourage behaviors that are in line with dormakaba’s values as well as with the long-term interests of the company’s shareholders. In the reporting period, the Compensation Committee conducted its annual review of the compensation system of the BoD and of the EC and confirmed that the current compensation system is well aligned with the business strategy and shareholders’ interests. As communicated in last year’s Compensation Report, the long-term incentive plan newly includes relative total shareholder return as an additional performance indicator in conjunction with earnings per share (EPS) growth. Further, in line with good governance principles, the Compensation Committee decided to introduce clawback and malus provisions on future long-term incentive awards. Additionally, the Compensation Committee performed its regular activities throughout the financial year such as the propositions of compensation for the members of the BoD and EC, as well as the preparation of the Compensation Report and the binding say-on-pay votes at the AGM. At the upcoming AGM, our shareholders will again be asked to prospectively approve the aggregate maximum amounts of compensation of the BoD for the period until the following AGM and of the EC for the financial year 2020/21. Further, our shareholders will have the opportunity to express their opinion about our compensation system and the compensation awarded to the BoD and to the EC by way of a consultative vote on the 2018/19 Compensation Report.

We will continue to regularly review our compensation policy in order to promote sustainable performance, alignment to the long-term interests of our shareholders and employees’ engagement, while being compliant with the regulatory environment. The BoD would like to thank our shareholders for their valuable feedback on our approach to executive compensation.

General IntroductionBasic principles of compensation

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